Political gridlock in Japan over a bond bill could force the government to delay spending, which would deal another blow to the fragile economy as well as under-pressure Prime Minister Yoshihiko Noda.
Tokyo is facing a cash crunch, with parliament yet to pass a law that would let the government issue bonds to cover about 40 per cent of its spending plans for the year to March.
And finance minister Jun Azumi has warned the country could run out of money in a matter of months.
“We will consider postponing the implementation (of spending) to delay the depletion of financial resources,” Jun Azumi told a regular press briefing in Tokyo on Friday, according to newswires.
“This is not fiction but a real story,” he added.
If the bill is not passed by September 8, the end of the parliamentary session, the government will have to order spending suspensions at government-linked firms and state universities, while also slimming administrative expenses.
Azumi also said the ministry would likely delay the payment next week of tax grants to municipalities worth about US$52.3 billion.